Platinum Investment, WPIC: The World Platinum Investment Council (WPIC) has released its Platinum Quarterly report for Q2 2024, revealing a significant supply-demand imbalance in the global platinum market. A combination of supply constraints and rising demand is set to push the platinum market deficit beyond one million ounces for the second consecutive year. WPIC’s revised 2024 full-year forecast shows that supply will fall by 1% to 7,089 koz, while total demand is expected to grow by 3% to 8,118 koz. This widening gap, driven by robust demand in the automotive, industrial, and investment sectors, is expected to result in a substantial market deficit of 1,028 koz.
Investment Demand Surges, Led by China
One of the report’s most notable revelations is the remarkable growth in investment demand, projected to reach 517 koz for 2024. This surge is driven by strong inflows into platinum Exchange-Traded Funds (ETFs), which saw a sharp 137% year-on-year rise in Q2 2024, and increasing demand for large bullion bars in China. China’s investment in platinum bars (500g and above) doubled year-on-year in Q2 2024, reaching 41 koz. This trend is expected to continue, with full-year investment demand in China forecast to grow by 40% to 188 koz.
Platinum ETFs added 444 koz in Q2 alone, marking the strongest quarter since 2020. Despite a decline in bar and coin demand elsewhere—due to disinvestment in Japan and reduced buying in North America—China’s appetite for large bars has more than compensated, showcasing the country’s growing influence on global platinum investment trends.
Jewellery Demand Climbs on Rising Gold Prices
Platinum jewellery demand experienced a significant revival in 2024, largely fueled by the widening price gap between platinum and gold. Global jewellery demand surpassed 500 koz in Q2 2024, a 5% year-on-year increase. This trend is expected to persist, with full-year demand projected to rise by 7%, reaching 1,994 koz.
India led the charge in jewellery fabrication, posting a 15% year-on-year increase, driven by strong exports to the US, UK, and UAE. Europe and China also reported gains, with European demand up 7% and Chinese demand up 5% in Q2. Platinum’s price advantage over gold has made it an attractive alternative for jewellery buyers, particularly in emerging markets like India, where fabrication is expected to rise by 28% this year.
Industrial Demand Boosted by Glass and Hydrogen Applications
Platinum demand from the industrial sector is forecast to rise by 1% in 2024, reaching 2,369 koz. This growth is largely driven by a 47% increase in demand from the glass industry, fueled by Chinese expansions in LCD production that had been delayed from 2023. In Q2 2024 alone, glass demand surged by 48% year-on-year to 216 koz.
Other sectors also contributed to industrial demand growth, with medical applications up 4% to 303 koz and hydrogen-based applications soaring by 123% to 64 koz. While demand from the chemical sector declined sharply, dropping 48% in Q2 2024 due to a slowdown in China’s petrochemical industry, overall industrial demand remains strong.
Automotive Demand Continues to Grow Despite Lower Vehicle Production
Global automotive platinum demand increased by 1% in Q2 2024 to 820 koz, bolstered by a higher share of hybrid vehicles and the expanded use of platinum-rich trimetallic catalysts, particularly in North America. Despite a reduction in global vehicle production estimates to 91.1 million units for 2024, automotive platinum demand is expected to reach a seven-year high, climbing by 1% year-on-year to 3,237 koz.
The demand growth is underpinned by a shift towards hybrid vehicles and platinum-for-palladium substitution, which is forecast to reach 752 koz this year. Stricter emissions regulations and ongoing consumer preference for hybrids over battery electric vehicles (BEVs) have further cemented platinum’s role in the automotive sector.
Supply Constraints Persist
While mine production showed a 4% year-on-year increase in Q2 2024, reaching 1,540 koz, this uptick is expected to be short-lived. Cost-driven restructuring in South Africa, coupled with a decline in Russian output, is projected to reduce total mined platinum supply by 2% for the full year, bringing it down to 5,508 koz—a four-year low.
Recycling supply also remained constrained, growing by just 1% year-on-year in Q2, as modest gains in spent autocatalyst recycling were offset by declines in jewellery and electronic scrap. For the full year, recycled platinum supply is expected to rise by 2%, reaching 1,581 koz.
Above-Ground Stocks Decline
Above-ground platinum stocks are forecast to decline by 25% in 2024, hitting a four-year low of 3,006 koz. This reduction leaves the market with just over four months’ worth of demand cover, intensifying the pressure on supply and increasing the risk of further price volatility.
Market Outlook and Future Trends
Despite the deepening deficit, platinum prices have remained relatively unresponsive to the market’s supply-demand dynamics. WPIC’s CEO, Trevor Raymond, attributes this to sentiment-driven pricing, influenced by lingering concerns over the future of platinum in the automotive sector and expectations of rapid electrification.
Trevor Raymond, CEO of the World Platinum Investment Council, commented:
“2024 will be the second consecutive year where the platinum market will experience a significant deficit, driven by robust demand and ongoing supply vulnerabilities. However, even with deficits of this magnitude, the platinum price appears unresponsive. For a long time, price setting has been influenced more by sentiment than by supply/demand fundamentals. Arguably, one of the key factors driving sentiment has been expectations of a continued and inevitable decline in automotive demand for platinum in the wake of Dieselgate, in combination with expectations of a rapid electrification of the global drivetrain. As things stand, while Dieselgate has led to a dramatic decline in diesel passenger vehicle production, growing substitution of platinum into gasoline catalytic converters, coupled with much slower than anticipated electrification, means that automotive demand for platinum is now well above pre-Covid levels. Drivetrain electrification is expected to continue to slow, and with increasing hybridisation of the drivetrain, we see sentiment shifting toward higher-for-longer automotive platinum demand. We expect this shift in sentiment, supported by consecutive deficits that are rapidly depleting above-ground stocks, will result in platinum’s strong underlying fundamentals playing a more prominent role in establishing its market value.”
Raymond also emphasized platinum’s expanding role in China’s investment sector:
“WPIC’s market development activities, including the annual Shanghai Platinum Week, and growing number of product partners in China have been instrumental in achieving the significant growth in investment demand in that region. This area of demand, which has been growing for several years, from 31 koz in 2019 to 186 koz in 2023 and is now fully included in our published demand data, is making a significant contribution to the overall market deficit and is poised for further growth. Notably, combining coin and both small and large bars in China, overall demand is forecast to surge by an impressive 34% this year.”
He added that platinum’s role in the hydrogen economy continues to be a key factor in future demand growth:
“The relevance of platinum’s growing role in the hydrogen economy remains as strong as ever. Our forecast for 2024 predicts a significant increase in demand, albeit off a small base, but demonstrating the momentum in the industry. The ongoing allocation and deployment of over US$300 billion in tax incentives and subsidies from governments worldwide continue to support and potentially accelerate platinum demand in the hydrogen sector. This trend is steadily capturing the attention of global investors, offering a compelling opportunity to engage with assets connected to global decarbonisation efforts.”
The platinum market is on track for its second consecutive year of significant deficits, as supply constraints and rising demand continue to shape market dynamics. With growing investment in China, robust automotive and industrial demand, and the increasing relevance of platinum in the hydrogen economy, the future looks bright for platinum—despite the current supply challenges. As market fundamentals strengthen and above-ground stocks dwindle, platinum’s long-term value proposition is becoming increasingly clear.
Know About World Platinum Investment Council: The World Platinum Investment Council Ltd. is a global authority on physical platinum investment, established to address increasing investor demand for accurate and dependable market information. Founded in 2014 by major platinum producers in South Africa, WPIC aims to boost global investor interest in physical platinum through insightful analysis and strategic product development. Its members include Anglo American Platinum, Implats, Northam Platinum, Sedibelo Platinum, and Tharisa.
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